SACCO Loans Are Growing Faster Than Deposits

In 2024, regulated SACCO gross loans grew by 11.41% to KES 845.11 billion. Deposits and savings grew by 9.86% to KES 749.43 billion. Demand for credit was still rising faster than the pool of member funds that usually supports it.

Why the figures do not have to match

A SACCO does not fund every loan using member deposits alone. It also has share capital, retained earnings, reserves and, in some cases, external borrowing. Loan repayments continuously bring cash back into the institution. Even so, deposits remain a central funding source.

What faster loan growth can mean

Strong loan demand can increase interest income and help members finance homes, school fees or businesses. It can also stretch liquidity if disbursements grow faster than cash inflows. Members may notice longer processing times, tighter loan conditions or campaigns to increase deposits.

The quality of growth matters

A bigger loan book is useful only when borrowers repay. Weak underwriting can turn rapid growth into arrears and provisions. Once a loan becomes non-performing, the SACCO may stop earning expected income while still needing cash for withdrawals and new loans.

Why external borrowing needs attention

A SACCO can borrow from banks or other lenders to close a funding gap, but this adds interest expense. If the SACCO depends heavily on outside funding, member loan rates or profitability may come under pressure. Members should review the external borrowing ratio and finance costs in the annual report.

Questions members should ask

How fast are loans growing compared with deposits? Is liquidity above the required minimum? Are non-performing loans rising? Has external borrowing increased? These questions give a clearer picture than celebrating loan growth on its own.

Bottom line

Credit growth is good when it is funded sensibly and repaid on time. The gap between loans and deposits is a reason to inspect liquidity and loan quality, not a reason to assume trouble.

Editorial note: Individual SACCO positions differ. Use audited figures for the specific institution.